This year's Busan International Film Festival and the accompanying Asian Film Festival both proved surprisingly successful, despite the welter of on-going political and supposedly criminal wranglings that have beset these two high-profile events.

Asura: City of Madness – Epic crime drama from Kim Sung-soo.

Asura: City of Madness – Epic crime drama from Kim Sung-soo.

To the surprise of some, both the Busan International Film Festival (BIFF) and the accompanying Asian Film Market proved reasonably successful this year. Given the political controversy and budget cuts that seemed to threaten the two events over recent months, many suspected that one – or, indeed, both – might never make it past the planning stage in 2016.

Although attendance was down by around 27%, the BIFF's programming line-up was widely acknowledged to be as strong as in any previous year, even managing to notch up an impressive slate of 96 world premieres. The Asian Film Market, meanwhile, was far busier than expected, with 157 companies taking part and visitor numbers of about 3,000 a day.

In the end, all of the major South Korean studios took a stand at the event, while many of the buyers were clearly on the lookout for the next Korean blockbuster. With 2016 a vintage year for the country's filmmakers – with Last Train to Busan, The Wailing, The Age of Shadows and Asura: The City of Madness all receiving international acclaim – this was, perhaps, only to be expected.

Overall, though, there were three particular issues that overshadowed both the festival and the market this year, notably muting the usually celebratory atmosphere. The first was the partial boycott of the BIFF by the Korean film industry, a move spurred by the fact that Lee Yong-kwan, the former Festival Director, is currently awaiting trial over allegations that he mismanaged funds. The local industry believes the charges are politically motivated, with Lee having had a long-running battle with Busan city officials over the BIFF's earlier screening of The Truth Shall Not Sink With Sewol, a documentary about the 2014 Sewol ferry disaster that rocked Korean society.

As a direct result, four out of the nine Korean industry organisations voted to boycott this year's BIFF, with one abstaining. As it stands, prosecutors are seeking to send Lee to jail for a least a year, while three other BIFF executives – including Jay Jeon, former Head of the Asian Film Market – are currently facing charges of embezzlement and fraud.

With the local film industry actively campaigning against these charges, there were times when it had looked as if the festival might have to be cancelled. Ultimately, while the event did go ahead, this uncertainty resulted in a big drop in its overall level of sponsorship.

In the end, three of Asian cinema's most high profile directors – Korea's Lee Chang-dong (Secret Sunshine), Taiwan's Hou Hsiao-hsien (The Assassin) and Japan's Hirokazu Kore-eda (Like Father, Like Son) – discussed the fate of the festival at a special session of the BIFF. Perhaps a little coyly, the event was billed as a discussion of "solidarity in Asian cinema".

Speaking during the event, Lee Chang-dong left attendees in no doubt as to where his loyalties lay, saying: "Former festival director Lee is not here with us and is at risk of assuming criminal liability. This is despite the fact that he devoted all his heart to this festival for the past 20 years. We should be giving him a medal of honour and not blaming him."

Taking a similarly hardline approach was Hou, who said: "I hope one day we'll be able to screen all the films in the world. To lose the BIFF, though, would be great loss for world cinema."

This year, Kim Dong-ho, the co-founder of the BIFF who retired five years ago, and actress Kang Soo-yeon were drafted in to keep the festival on track, with both pledging to fight for the event's independence. While they have already succeeded in changing the rules that determine the festivals' constitution and structure, the local industry is still set on restoring Yong-kwan's reputation, as well as that of the other executives currently on trial. The verdicts of the initial hearings are due later this month.

As if that wasn't enough to put a dampener on the celebrations, a number of local companies were also still coming to terms with Korea's tough new anti-corruption laws, which came into effect in late September. Designed to stem the tide of bribery among government employees, the laws prevent people buying a meal worth more than 30,000 Korean won (HK$205) for public officials, employees of state-run companies or journalists. It is also forbidden to give gifts worth more than 50,000 won to any such individual.

Uncertainty over how the law will be implemented, prompted many of the Korean studios to cancel the lavish parties they usually host during the course of the BIFF. Typically, these have been the occasions where they present their new film projects and distribution slates for the next year.

Overseas success: The Age of Shadows.

Overseas success: The Age of Shadows.

The Handmaiden: An erotic thriller Korean-style.

The Handmaiden: An erotic thriller Korean-style.

In the short term at least, it is believed that the laws will have a considerable impact on the way Korean films are promoted both at home and abroad. Highlighting the problem, one Korean Film Executive – who asked to remain anonymous – said: "You may have a government official at your launch event, which means that – technically – you could be breaking the law. It's too difficult to check."

A third issue – and one that had a bigger impact on the Asian Film Market than the Festival – was the growing political tension between China and South Korea. At present, this has resulted in a ban – albeit an unofficial one – on the screening of Korean content in China.

This particular problem follows a joint decision by the US and South Korea to deploy the THAAD missile defence system on the Korean peninsula, ostensibly as protection against North Korea's nuclear threat. Predictably, China objected to the move and, among other retaliatory moves, it has restricted showings of Korean films and TV dramas, both of which are hugely popular throughout Asia.

While no official announcement has been made, Korean actors, singers and filmmakers are finding it difficult to obtain visas to work in mainland China, while many China-Korea film co-production projects appear to have stalled. Speaking off the record, a number of Chinese distributors indicated that Korean movies will no longer be approved for theatrical release on the mainland or cleared for use by VOD (video-on-demand) services. Similarly, Korean TV dramas have also started disappearing from mainland streaming services and broadcast TV.

A further consequence of this was that there were far fewer Chinese film distributors attending the market. Speaking under conditions of anonymity, one of the few Chinese buyers present said: "While we're still looking to acquire Korean films, we probably can't do anything with them for the next year or so."

Uncertainty over Chinese policy also torpedoed many of the usual discussions of Chinese/Korean co-productions. Similarly, any prospect of Chinese companies taking equity stakes in Korean production companies or talent agencies seemed somewhat remote this year.

Despite all this, though, the Asian Film Market still managed to draw a fair number of Chinese companies this year. In truth, though, this was partly due to a prescient move made last year when the event's organisers decided to shift the focus towards the buying and selling of source material, rather than of completed films.

Introduced for the first time last year, Busan's E-IP (Entertainment Intellectual Property) Market proved an instant hit, with its second outing equally well supported. In particular, many of the companies in attendance were only too keen to acquire the rights to Korea's creative and high-concept novels, webnovels, web comics and scripts.

At present, there doesn't appear to be any restriction on Chinese companies buying Korean IP as source material for wholly Chinese-language productions – or on Chinese-language remakes of Korean films. Indeed, several Chinese companies – including Alibaba Pictures, Wanda Media, Huace Media and Huayi Brothers – attended the E-IP Market meeting with the creators of 20 selected Korean novels and other properties.

Speaking as a panel member of the E-IP's Financing Seminar, Andy Jiwoong Kim, Chief Executive of TGCK Partners, a Seoul-based production company, described how his business pools funds from both Korea and China, investing in projects based on novels, comics and webtoons as they come with an inbuilt fanbase and are, consequently, less risky. He said: "We're also working with Chinese studios that are investing in Korean webtoon companies, as well as some animation companies that are interested in using Korean IP for animated features and TV dramas."

Asked whether the current political climate is adversely affecting his company's China co-productions, he said: "The political issues are there, but we don't think they'll be prolonged issues. We're still at the development phase of a lot of projects."

Staying in the IP arena, Jo Han Kyoo, Director of the Contents Business Team for Kakao, a Korean messaging app, said a number of the platform's webtoons are now being adapted into live-action movies and TV series. Principal among these is Tong, the story of a bullied child who becomes a legendary street fighter. This is currently in production as Tong: Memories, an upcoming online movie.

As the project originated online, Kakao can mine a huge amount of data about its fanbase. Highlighting the advantages of this, Kyoo said: "We have the advantage of immediate consumer feedback courtesy of our online platform. This helps us target a certain niche, whereas traditional platforms can only focus on mass-market projects."

Although the E-IP market currently only showcases Korean content, next year the organisers hope to expand it, bringing Japanese manga, Taiwanese novels and Chinese web novels all within its remit. Such a move could help position the Asian Film Market as a North Asian hub for IP and source material, giving it a real point of difference compared to many of the other film markets in Asia and beyond.

This focus on IP, however, doesn't preclude completed films from being sold at the Asian Film Market. Realistically though, given the busy international market schedule, buyers tend to focus solely on two kinds of films in Busan – hot Korean titles or films that have been selected for the official festival line-up.

In particular, Korean films continue to be a huge draw for buyers. Over the past year, the country has produced a number of notable international hits, including The Handmaiden, Park Chan-wook's erotic period drama, and Last Train to Busan, Yeon Sang-ho's zombie horror.

This kind of success alone should ensure that both the BIFF and the Asian Film Market continue to attract the international film industry for many years to come. Both events, though, clearly have several hurdles to overcome – many of which are political issues that are playing out far above the heads of the festival organisers, leaving them with little influence over the eventual outcome.

Off the rails zombie horror: Last Train to Busan.

Off the rails zombie horror: Last Train to Busan.

The Busan International Film Festival (BIFF) 2016 took place from 6-15 October, while the accompanying Asian Film Market ran from 8-11 October.

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